Davis v Perry O'Brien Engineering Pty Ltd

The appeal in Davis v Perry O'Brien Engineering Pty Ltd concerns the assessment of damages resulting from misleading and deceptive conduct, as well as breaches of warranty, in the sale of shares in a trading company. The dispute arose between the Sellers, who provided inaccurate financial information and failed to disclose the true financial performance and liabilities of the company, and the Buyers, who sought damages for these breaches. The case was heard in the Supreme Court of New South Wales, Appeal Division.

The legal issues before the court included the appropriate measure of damages for misleading and deceptive conduct under the Australian Consumer Law, as well as for breaches of warranty under contract law. The Sellers contested the trial judge’s approach to assessing damages on the basis that, but for the misleading or deceptive conduct, the transaction would not have occurred. They also challenged the exclusion of a loan provided to the company in the assessment of damages and questioned the trial judge’s discounting of an expert's valuation of the company’s plant and equipment. Furthermore, the Sellers argued whether the Buyers’ damages should be assessed inclusive or exclusive of goods and services tax (GST).

The court determined that the trial judge’s assessment of damages was correct. It upheld that the measure of damages for breach of warranty should be based on the premise that, but for the misleading or deceptive conduct, the transaction would not have occurred. The court also found that the exclusion of the loan from the damages assessment was appropriate as it did not alter the value of the shares at settlement. Regarding the plant and equipment, the court affirmed that the trial judge was entitled to discount the expert’s valuation. The court concluded that the Buyers’ damages were correctly assessed exclusive of GST.

The appeal was dismissed, and the Sellers were ordered to pay the Buyers’ costs of the appeal. The court's decision affirmed the trial judge’s assessment of damages and the measures taken to account for the misleading and deceptive conduct and breaches of warranty.